Friday, June 5, 2009

Against Twombly & Iqbal -- A Reply to Drug & Device Law Post

Rory and Jeremy have invited responses to the formidable and polite defense of Twombly and Iqbal posted by the folks at the Drug & Device Law blog.  I’m not shy—I’ll give it a shot.

Let me first note a couple of areas of agreement that I have with DDL’s defense.  I agree that the decisions are attempts to be “practical and common-sense.”  Reasonable people can disagree about the proper pleading standard, and I do not think that the standards of Twombly and Iqbal are unreasonable.  To borrow from AEDPA, I think they are wrong, but I do not think they are unreasonable.  I think DDL is right that they are borne of practicality, of a perceived need to reduce discovery pressures.

I also agree that discovery has significant problems.  DDL is right that discovery costs can be unduly high and abusive (although I’d suggest that it’s not always the plaintiff that “weaponizes” discovery and not always the defendant that bears the costs), and that there may be room for reforms to the rules to alleviate those burdens.

I might also agree (though I’d want to bone up on my tort law knowledge first) that the allegation that “the defendant violated FDA regulations” without stating the regulation that was violated or what the defendant did should be inadequate under Rule 8.  The same might be said for a complaint that simply alleges “defective design.”  But I doubt that such allegations would have survived even pre-Twombly because they fail to give proper notice to the defendant.

Finally, I agree that there are two sides to the coin.  We should worry about imposing difficult pleading burdens on plaintiffs.  But DDL is right that we should worry too about frivolous lawsuits that impose significant costs on defendants.  The question, of course, is how to do both.

Having exchanged pleasantries, though, let me now engage our disagreements.  There are several, but I'll highlight two of the most fundamental.

First, I disagree that “[t]he only way to avoid discovery . . . is to win a motion to dismiss.”  Justice Stevens, I think, does a nice job in his Twombly dissent explaining how a district court has ample authority to structure and limit discovery to avoid undue burdens while still allowing the plaintiff access to the crucial information she needs.  DDL quotes extensively from the Twombly majority opinion, which in turn quotes from a Just Easterbrook article on discovery abuse written in 1989, arguing that district court control of discovery costs is largely ineffective.  But that has not always been the case in my own experience defending large corporations against lawsuits.  And it certainly does not ring true in theory, particularly after the amendments to the Federal Rules made after 1989 that limit discovery and give more supervisory control to the judge.  I see no reason why (and my anecdotal experience suggests the contrary) judges/magistrates cannot effectively measure the costs and benefits to the requester and the burdens to the defendant.  (Isn’t that what Rule 26 requires anyway?)  And, even if only a rough estimation is possibly, the district court has the authority to narrow the discovery scope, to allow limited discovery at first as a “test” production, and to order cost-shifting where appropriate to alleviate the defendant’s burden.  In short, the idea that discovery costs are always a problem that cannot be addressed within the confines of the existing discovery rules is misplaced.

The discovery rules may still not be up to the task of controlling undue costs in some cases, but that suggests that we ought to consider how to fix the problem by reforming discovery rather than by resort to raising the pleadings bar.  After all, the discovery costs and burdens apply (and may apply unfairly) even when the claim has merit.  So, I think that if folks have problems with discovery, the discussion ought to properly focus (at least initially) on discovery changes, not pleadings changes.

But even if reforms to alleviate discovery burdens must go beyond the discovery rules, it’s not clear to me that they must focus on Rule 8 pleading.  Other options might include tinkering with Rule 12(e), Rule 11, or fee-shifting rules.  I’m not necessarily advocating these options—I just mean to say that I’m not convinced that raising Rule 8 pleading standards best achieves the amelioration of discovery costs that DDL seeks.  If discovery costs are really the elephant in the room, then let’s deal with the elephant.

Second, DDL does not appreciate fully the downside to raising the pleading standards.  The failure to plead a plausible claim is not necessarily an indication that the claim lacks merit.  Nevertheless, Twombly, at least, appears to proceed on that premise, calling the complaint at issue there “largely groundless,” having no “reasonably founded hope” of revealing supporting evidence in discovery.  And DDL appears to assume that as well, calling the “hallmark of a meritorious case is that it’s factually supported from the get go.”  In some cases, that might be true.  But it is not always true, particularly in the kinds of cases where the plausibility standard is likely to be invoked the most—discrimination and conspiracy cases.  In those cases, the information often necessary to meet the plausibility standard is largely in the hands of the defendants.  The problem is one, as Randy Picker described it, of information asymmetry.  The point is that, in many cases, just because the plaintiff doesn’t have a fact in her possession doesn’t mean it didn’t happen.  And, as a result, erroneously equating the failure to plead plausibility with meritlessness will result in fewer meritorious cases filed, fewer meritorious cases surviving to discovery, and fewer injuries resulting from wrongful conduct being redressed.  Neither the Court nor DDL comes to terms with this unjust result.

--Scott Dodson


UPDATE: I now see that Howard Wasserman also has a response up on Prawfslaws here.

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Hi Rory and Scott,

I just noted that the DDL authors counter-commented to some posts of mine. I would like to respond here. Thanks ---

Thanks to the DD&L commentators for your comments on Iqbal and your perspective.

I continue to maintain, however, that the Twombly/Iqbal "fix" comes at a higher cost than "fixing" discovery.

First, I hate to quibble, but I did not posit that all complaints must go to a jury, as you claim. The piece you quote is a newspaper op/ed. It necessarily is limited in space. So while I was not as nuanced as I would have liked, I didn't make that strong claim. In the sentence preceding the one you quote, I wrote: "Our system of justice, however, is set up to reserve such on-the-merits decisions for later stages of trials, after gathering evidence, and ultimately for juries." I was referencing summary judgment procedures to a non-law audience.

In any event, I would like to speak briefly about discovery, costs, and substantive law.

I am a former civil defense attorney, I am sympathetic to the high costs of discovery. Indeed, one study of nearly 1000 civil cases found discovery responsible for, on average, half of the total cost of litigation. See Thomas E. Willging et al., Fed. Judicial Ctr., Discovery and Disclosure Practice, Problems, and Proposals for Change 15 (1997). I agree with Scott that defense counsel "weaponize" discovery too, especially when they believe the defense can outspend the plaintiff, which is very often the case (at least in my experience). So I am not sure that weaponzied discovery is a one-way injury.

Further this big tab is not consistent across all types of suits. For example, follow up suits in mass torts cost very little in terms of discovery, because information from the lead case is reused. Simple tort cases are cheap on discovery. Patent litigation, on the other hand, tends to be expensive. Contract cases tend to have inexpensive discovery. And on and on and on.

All this is to say, a simple "discovery is too expense" response may be true --- but it is not universally true. Thus, a universal "fix" seems inappropriate. Now discovery might be too expense in certain practices, say patent law or drug mass torts, but we should prove that. Iqbal does not even pretend to make such a proof.

All these questions cry out for a solid base of statistically data that I am unqualified to provide. But even if discovery is 50% of the cost of every case, that doesn't necessarily prove that the cost it too high. That stat., includes plaintiff wins, defense wins at trial (by definition a closer case), defense wins at summary judgment, etc. If we are to do a cost-benefit analysis of tighter pleading (which is what we are up to, clearly textual analysis and precedent are not driving the bus) then we need some evidence to show that defendants spend $X in defending fishing-expedition suits (with some definition of fishing-expedition that is neutral). Then we could compare the potential lost plaintiffs' claims to that amount.

But what does seem to be clear is that higher discover costs maps on to the substantive law. That is, discovery is cheap in a breach of contract case or a car accident because the elements of the claim are easy to prove.Design defect is tough to prove and thus expensive. Even worse for discovery costs are intentional discrimination claims.

But it seems to me, that if the substantive law makes defendant liable for conduct X, and information about that conduct X is necessarily only in the possession of defendant, pre-discovery dismissals based upon the veracity of plaintiff's claim must be forgiving. There is simply no other source for the relevant information. One could well run into due process arguments, if this is not the case. It seems that the Iqbal position is as much an attack on substantive intentional discrimination law (the Court has no love for Bivens claims) as it is a procedural opinion. Perhaps intentional discrimination laws and design defect laws cost more than they are worth ... I would like to see the cost-benefit analysis, however, before making that conclusion. Assuming that they are a net benefit, then procedure should not be used to gut them sub rosa.

This does not mean that institutional defendants just have to pay. Short of purging the substantive law of such subjective elements, there are many discovery-based solutions worth considering. Many states, via their version of Rule 27, allow pre-suit discovery. More aggressive use of Rule 11 for fishing expedition suits. Moving certain claims to a Rule 9 standard. Having an initial brief discovery period, before making plaintiff pass a plausibility standard. Etc.

In short, I have yet to see the evidence that discovery is too expensive all the time and that no modification to discovery can rein in the problem.


Posted by: Lumen Mulligan | Jun 8, 2009 12:58:06 PM

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